2) Eligibility (who is entitled for Only the Registered shareholders or their bankers are eligible.
dividend distribution) In case of a listed company it is decided (shareholders between whom the dividend distribution
will take place) by the company 7 days prior before closing the registers of the members at the
AGM.
Preference shareholders will be paid the dividend before the equity shareholders as they enjoy a
preferential right.
(R-1) Period for making payment of The chief executive officer of every company is responsible to make the payment of cash dividend within a
dividends period of Fifteen (15) working days from the date of its declaration.
5) Payment of dividend Dividend is deposited in a spate bank account within 5 days from the date of its declaration and is
paid within 30 days from it date of declaration.
It is paid in cash, cheque, and dividend warrant or in any electronic manner and not in kind.
It is paid proportionally to the paid up value of shares.
6) Unpaid Dividend Account If the dividend is unclaimed or unpaid after 30days of its declaration then the amount of that
dividend is transferred to a special account called the ‘Unpaid dividend account’ within 7 days
from the date of expiry of thirty days given for the payment of the dividend.
If any amount in the Unpaid dividend account remains unclaimed for 7 years then that amount is
transferred to the Investor Education & Protection Fund. But, an intimidation to all the members
will be given individually 6 months prior to any such transfer.
7) Revocation of Dividend Once the dividend is declared it becomes a debt to the company and cannot be revoked.
8) Prohibition on Dividend If a company is under default with respect to section 73 & 74 of the Act, which deals with deposit and
repayment of deposit or interest thereon may not declare dividend for that financial year.
9) Failure to Distribute Dividend Where a company fails to comply with the provisions relating to dividend distribution i.e., if any dividend has
not been paid after 30 days from its declaration to any shareholder who is entitled to its payment. Then,
every director who knowingly is a party to default is liable for imprisonment which may extend to 2 years or
a fine which shall not be less than one thousand rupees for every day during which such default continues
and the company shall be liable to pay simple interest at the rate of eighteen percent per annum during the
period for which such default continues as per section 127 of the Act.
If the non compliance was due to-
a) It could not be paid by reason of the operation of any law;
b) Where a shareholder has given directions to the company regarding the payment of the dividend
and those directions cannot be complied with and the same has been communicated to him;
c) If there is a dispute regarding the right to receive the dividend;
d) Where the dividend has been lawfully adjusted by the company against any sum due to it from
the shareholder; or
e) Where, for any other reason, the failure to pay the dividend or to post the warrant within the
period under this section was not due to any default on the part of the company.
Then, no offence under this section shall be deemed to have been committed.